John R. Graham is a financial, economic, and policy analyst in the health sector. His appointments include:
Senior Fellow of The National Center for Policy Analysis;
Senior Fellow of The Independent Institute;
Senior Fellow of the Pacific Research Institute;
Senior Fellow of The Fraser Institute;
Adjunct Scholar of The Mackinac Center for Public Policy;
Columnist at Forbes.com's The Apothecary blog;
Member of the Board of Visitors of The Benjamin Rush Society of medical students and physicians.

Ronald Reagan's Advice on Health Reform

Today, February 6, would have been Ronald Reagan’s 100th birthday. Over at National Review, I published a piece on Reagan’s views on health care policy:

In 1961, Reagan recorded an LP on behalf of the American Medical Association’s Operation Coffee Cup, a campaign to defeat the single-payer health plan that came to be known as Medicare. (Doctors’ wives would organize coffee meetings in order to persuade their friends to write letters to Congress in opposition to the bill.)

You can listen to Reagan’s recording, “Ronald Reagan Speaks Out Against Socialized Medicine,” in the YouTube video below. One of the more interesting bits occurs at the 3:44 mark, where Reagan endorses the Kerr-Mills Act of 1960, an alternative to Medicare that was sponsored by two conservative Democrats, Sen. Robert Kerr (D., Okla.) and Rep. Wilbur Mills (D., Ark.). Kerr-Mills, signed into law by President Eisenhower, empowered the federal government to provide block grants to states, that states could then use to create their own programs for the medically needy:

What is the Kerr-Mills bill? It is a frank recognition of the medical need or problem of our senior citizens that I have mentioned. And it has provided, from the federal government, money to the states and the local communities that can be used at the discretion of the state to help those people who need it.

Now what reason could the other people have for backing a bill which says, “We insist on compulsory health insurance for senior citizens on a basis of age alone, regardless of whether they are worth millions of dollars, whether they have an income, whether they’re protected by their own insurance, whether they have savings?” I think we could be excused for believing that, as ex-Congressman Forand said, this was simply an excuse to bring about what they wanted all the time: socialized medicine.

James Madison in 1788, speaking to the Virginia Convention, said, “Since the general civilization of mankind, I believe there are more instances of the abridgement of the freedom of the people by gradual and silent encroachment of those in power, than by violent and sudden usurpations.”

You don’t hear much about the Kerr-Mills Act anymore, for a reason. After the enormously consequential election of 1964, which returned Lyndon Johnson to the White House and swept large liberal majorities into Congress, the Kerr-Mills Act was rendered obsolete by the passage of Medicare and Medicaid in 1965.

Had it been allowed to play out, Kerr-Mills could have evolved into an effective, federalist approach to health care reform. We’ll never know.

I’m amused, if only because the real noteworthy thing about Reagan’s performance was his warning that Medicare would put the United States on a road to Soviet tyranny. A half-century later, and the United States is still a mixed capitalist economy, with a (mostly) functioning democracy, and a distinct lack of gulags, work camps, and mass executions. Indeed, even the avowedly anti-tyranny Ronald Reagan had little interest in ending Medicare once he became president, as it had yet to enslave ordinary Americans. The broader lesson? Conservatives will always attack expansions of the welfare state as intolerable constraints on freedom, and eventually accept them as standard parts of the political landscape.

While Bouie makes some fair points, his comments imply that he doesn’t take seriously the consequences of the below chart, which maps out the contribution of Medicare and Medicaid to the pending bankruptcy of the United States:

I would note that this chart does not include interest on the debt, which will climb even more dramatically over the projected period.

Whether or not Medicare and Medicaid are politically popular, the fact remains that these programs are disastrously inefficient, offering the elderly and the poor worse care than they could receive under a less socialized system, and putting the country’s financial stability under significant risk.

The bottom line is that Kerr-Mills would have likely evolved into a much better and more sustainable system than the one we have now. The more we can move in that direction, the better. In that way, we would have done well to heed the Gipper’s advice.

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Do you think 50 year old advice from a paid consultant for the AMA is applicable today? Especially considering the fear of communism from the time period and purposeful conflating of socialism with it? Reagan was well known spokesman for GE too, though I would not take things he said about GE while under contract from them as anything other than marketing hyperbole. I also doubt GE or the AMA would endorse or support any of those old policies today. Other than capitalizing on Reaganomas as a means of pushing your own bottom line, is there any value in bringing him up? It appears disrespectful of your readers, many of whom worship the man. Do you think we are not smart enough to notice this? Even your chart about medicare/medicaid costs is misleading; are you seriously suggesting that privatizing those portions of the economy, or fragmenting it even further into a larger miasma of state bureaucracies, will make that line go down? Based on RR making a paid endorsement as a lobbyist for the AMA 50 years ago? This was not far from when MLK said he had a dream and LBJ talked about eliminating poverty. Neither were paid by an outside group to produce those speeches, and I still would not take the advice from them to apply to conditions today.

I find it wearisome that one factor constantly remains obscure in discussions of the debt, the right or wrong of Medicare, etc. This is that we face a unique situation… the aging of the Baby Boom.

It is, indeed, a tsunami. Even had we gone to a state-based medical care system for seniors, such as the Kerr-Mills bill, it would not have solved this issue. One may argue that having Medicare cover all, regardless of personal worth, was a mistake. However, that does not remove the fact of the Baby Boom – nor the fact that the vast majority of these people will not reach 65 with substantial funds.

In the end, the only way to stop spending on health care for the elderly is to encourage them to die. This can be easily accomplished by stripping away Medicare, Medicaid, etc. The older & sicker they become, the harder it becomes for them to fight on.

IMNO… the Kerr-Mills bill would have accomplished this quite easily because like the Poor Laws in Ireland during the Potato Famine, it would have been a race to the bottom to keep the people most in need out of your jurisdiction. It would be a case of “How can we provide the least possible care, so that the old & poor will either die or leave for greener pastures?”

Is it your opinion that Reagan only held the views he did because the AMA once paid him a speaker’s fee? This is quite a stretch. Whether you agree or disagree with Reagan, nobody seriously thinks that his views were the result of bribery.

A lot of people seem to think the way to refute an argument is to knock the character and/or motives of the person who is making the argument. Let’s try to stick to the substance of the policies themselves.

And yes, I am seriously suggesting putting money in the hands of seniors and the poor, rather than bureaucrats.

You make an interesting argument re “race to the bottom.” I think the history of Medicaid contradicts you, though. Medicaid is a program administered by the states, and Medicaid spending has dramatically increased throughout the country since the program’s founding.

Spending & coverage has increased, partly due to technological advances. In the 1960s, who could have foreseen the MRI, etc?

However, the desire & ability to increase presented few difficulties. Even had we gone with the Kerr-Mills method, things would have been mostly OK… until the Boomer tsunami.

We still had our minds in the post-WW2 mode. The era from ca 1946-ca 1972 was absolutely unique in world history. The industrialized world had pretty much destroyed itself, except for the US. The US alone had escaped damage. We had factories, manpower, & vast resources within our borders. The world needed everything to rebuild & there was no real competition. What’s more, because of the Cold War, the US & USSR were able to keep our ducks in a row, so life had a certain predictability. (I remember the duck & cover drills & my first vote was for Ronald Reagan for Gov. of California). We might worry about the Red Menace, but there was no worry about suicide bombers & jets being flown into skyscrapers. In that era, if one got cancer, there was not really much to do for it. We didn’t expect treatment to become normal. Now, often, it’s just a matter of affording it.

That world ended, but because we had grown accustomed to it, we did not realize. Those who really profited were those of the “the Greatest Generation.” They saw the masses of Boomers as an unending supply of funds to care for them. Unfortunately, the Boomers carried on with what they grew up with. They did not want to see the coming cliff.

We are now in a different world. The program to deliver senior health care doesn’t really matter… the Boomer numbers are still there.

With a National system of elder health care or any health care, everyone gets pretty much the same (depending, of course, on localized quality & how much outside the system one can afford). Unless such care is mandated, care, if left to state & local jurisdictions becomes much spottier. There is always incentive to somehow get the most needy out of your jurisdiction… to get the bums to move on.

I’ll give you a reverse example. My parents, who lived in Los Angeles, were on SSI. SSI gave them Medi-Cal benefits (which at the time included vision & dental – Both my parents had severe vision problems). Medi-Cal also paid for Part B (doctors visits & limited prescriptions) of Medicare.

My father wanted to move back to Indiana, where they were from… my mother, with reason, would not move. In Indiana, they would have been about $15/mo over the limit to qualify for SSI, so they would not have qualified Medicaid (which in any case did not cover eyes & teeth) & Part B of Medicare would have come from their Social Security checks. Despite, the lower cost of living there, they would have been far worse off. Much would have depended on whether or not they’d have qualified for winter heating assistance. To cope with winter heating costs, my grandmother would close up her small, century-old 2-room house in the country, & move in with her brother’s family in winter.

Another example: My dad’s sister never had dentures or glasses – she couldn’t afford them. Back then, had she moved to California she would have had them via SSI & Medi-Cal. In the end, her lack of teeth & constant abcesses in her gums may have killed her. She died of heart failure due to heart valves damaged by infection.

States that provide fewer senior benefits know that the elderly will not move back to childhood homes. They know that a high percentage will move to places that provide more help… or where they can escape costs of things like heating.

Now with the Boomer tsunami, it is going to become an issue of life & death. The game has changed.

My opinion is that Reagan was anti-communist, not anti-medicaid/medicare, especially by the time he was president. He clearly saw a need for such programs or would have tried to eliminate them when he had the chance. As to the merits of either program, or the cost of taking care of our elderly and poor, we are all going to pay for it one way or another. Even if everything in health care in this country was handled by private companies, they would group together over time to form a huge bureaucracy to save money. It is why we have Walmart and Microsoft and GE. Only recently did I discover that medicaid and medicare have different forms for everything. Medicare appeared a lot more powerful because it is one form for the whole country. Free market and personal choice are not mutually inclusive, just as socialism and bureaucracy are not. RR understood that. Merry Reaganomas BTW

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